Court: United States Court of Appeals for the Eighth Circuit on appeal from the Western District of Arkansas, Sebastian County

Plaintiff's Attorney: Unknown

Defendant's Attorney: Unknown

Description: Ronald Jackson (Jackson) brings this ERISA1 action against Prudential
Insurance Company (Prudential), alleging his claim for long term disability (LTD)
benefits was wrongly denied. The district court2 affirmed Prudential's claim denial,
finding (1) Prudential had broad discretion to define the terms of the LTD insurance
policy, and (2) Prudential's determination Jackson was not totally disabled under the
policy's terms was reasonable.

Jackson appeals, asserting Prudential improperly redefined critical policy
contractual terms when Prudential's disability determination was based on whether
Jackson could perform sedentary work, not on whether Jackson could perform the
material and substantial duties of his own occupation as Chief Financial Officer
(CFO) for a furniture retailer. We affirm.

I. BACKGROUND

Jackson worked at Furniture Factory Outlet, Inc. (FFO), as the CFO, from May
1993 until he terminated his employment as of April 15, 2003. As an FFO employee,
Jackson was covered under a Prudential group LTD policy. Under the Prudential
policy's terms Jackson would qualify as disabled if he were unable to perform the
"material and substantial duties of [his] occupation."

In November 2002, Dr. James Frederick (Dr. Frederick) diagnosed Jackson as
suffering from hypertension; obstructive sleep apnea with unknown severity;
shortness of breath and fatigue related to weight and restrictive lung disease; obesity;
emphysema and coronary calcifications diagnosed by CAT scan; chronic disorder of
the colon; and abdominal pain. An exercise stress test showed an ejection fraction
(EF) of 20%.3 In late November 2002, Jackson was evaluated by Dr. Jorge Hernandez
who found the results of Jackson's November 6, 2002, pulmonary function test to be
"remarkably abnormal." Afterwards, Jackson sought a consult referral to the Mayo
Clinic for a second opinion.

Jackson was first examined at the Mayo Clinic on January 2, 2003, by Dr. Titus
Evans (Dr. Evans), a cardiologist. Dr. Evans's notes indicate that on November 27,
2002, Jackson underwent a transesophageal echocardiogram which demonstrated an
EF of 35% and a nuclear stress test conducted on November 7, 2002, which indicated
an EF of 20%. Without having performed any tests on Jackson, Dr. Evans listed
diagnoses of cardiomyopathy, probable obstructive sleep apnea, mild restrictive lung
disease, weight problems, and moderate coronary calcification. Jackson informed Dr.
Evans he had "noted a gradual decline in energy level over the past several years."
On January 3, 2003, Jackson underwent a transthoracic echocardiogram at the
Mayo Clinic which indicated an EF of 25%. Three days later, a transesophageal
echocardiogram demonstrated an EF of 30%. The physician conducting this test noted
"[w]ith mild sedation [for the test] the patient developed episodes of apnea and upper
airway obstruction," reporting these "[f]eatures are very suggestive of sleep apnea."
On January 6, 2003, Dr. John Shepard (Dr. Shepard), a Mayo Clinic sleep
doctor, evaluated Jackson and concluded Jackson "will likely have quite severe
obstructive sleep apnea." On January 7, 2003, Jackson was evaluated at Mayo's Heart
Failure Clinic by Drs. Martha Grogan (Dr. Grogan) and Allison Pritchett (Dr.
Pritchett). Dr. Pritchett reported "emphasiz[ing] to [Jackson] that I do believe that
sleep apnea is playing a key role here. It will be important to treat [the sleep apnea]
aggressively. I suspect we may see improvement in his blood pressure control and
ventricular function with this." Dr. Grogan reported Jackson "has prominent fatigue
which is almost certainly related to sleep apnea, and I suspect only a minor
contribution if any related to left ventricular dysfunction." Dr. Grogan concluded,
"[t]here is a good chance for significant improvement including normalization of left
ventricular function with treatment of sleep apnea."

On January 7, 2003, Dr. Evans reviewed the recent Mayo Clinic studies
concluding Jackson's left ventricular dysfunction, low EF, and "fatigue related to
sleep apnea," stand "a good chance of improvement with treatment of the sleep apnea,
weight loss, etc." That evening Jackson underwent a sleep study, during which
Jackson experienced 124 total "disordered breathing" episodes per hour during the
initial diagnostic part of the study. Jackson was then provided with a nasal
Continuous Positive Airway Pressure (CPAP) machine for the second part of the
study. Jackson's "sleep disordered breathing and snoring were effectively eliminated"
with use of the CPAP machine. Based on the sleep study results, Dr. Shepard
concluded Jackson did have severe obstructive sleep apnea. Dr. Evans reported his
expectation that "with CPAP [Jackson's] cardiac function, including [EF], and
ventricular irritability, will all improve."

Jackson began use of the CPAP. On April 15, 2003, at a follow up
examination, Dr. Frederick noted Jackson has used the CPAP "ever since [his visit to
the Mayo Clinic] and noticed remarkable improvement in his sleep and daytime
energy." Dr. Frederick also noted recent testing regarding Jackson's tachycardia
demonstrated "considerable improvement since the primary study," and that a recent
echocardiogram showed Jackson's "left ventricular [EF] improved from 20% to 45%"
with Jackson's use of the CPAP machine.

At the April 15, 2003 examination, Jackson and Dr. Frederick discussed
Jackson's job, with Dr. Frederick noting Jackson "has been under a great deal of stress
lately . . . . [and has been] experiencing quite a bit of conflict with the owners of
[FFO] . . . . [causing Jackson to become] more irritable and [to have] more frequent
arguments with the owners and just today he was terminated . . . ." Jackson
commented to Dr. Frederick that he did not feel he has "the energy to start a business
all over again or take on a job as he had before with [FFO] that entailed so much
responsibility."

Jackson filed a disability claim with Prudential on April 26, 2003, describing
his condition as "Heart Failure - left ventricular dysfunction - resulting in
cardiomyopathy." Jackson asserted his condition interfered with his ability to work
because it (1) caused an inability to concentrate, (2) caused memory problems,
(3) made him unable to exert himself physically, and (4) left him feeling totally
fatigued all the time. Jackson classified his job as "Sedentary" when asked to identify
"What Job Category best describes your required job duties?" As a part of the claims
process, Prudential was provided with Jackson's actual job description which listed
eighteen separate functions or duties.4 While these duties were primarily deskbound
or sedentary, they required substantial cognitive and intellectual functioning.

Prudential's claim review focused on the physicality of Jackson's job which
Jackson had categorized as sedentary. On July 25, 2003, claim manager Mary Ann
DeSantis, RN, noted Jackson was at home and "is able to mow large lawn, and
whether or not [he is using] a riding mower, this activity is greater than or equal to
sitting at a desk," concluding Jackson's "sleep apnea has been corrected via CPAP .
. . [and Jackson] could perform sedentary work." On July 28, 2003, Prudential
determined Jackson was able to perform sedentary work, such as mowing his lawn,
had an EF of 40 to 48%,5 and, according to Dr. Frederick, Jackson "moves around
easily without any of the shortness of breath that was so noticeable prior to starting
CPAP." Prudential determined Jackson was not disabled under the policy's terms.
Jackson appealed the claim denial asserting he lacked "the physical or cognitive
abilities to perform his occupation." Jackson submitted a copy of his job description,
which Prudential noted it already had, and upon which it classified his occupation as
sedentary. Prudential consistently focused on Jackson's EF, which improved through
the treatment of his severe obstructive sleep apnea, his use of CPAP, and Prudential's
determination Jackson's occupation was "sedentary."

In a report dated April 22, 2004, Dr. Joyce Bachman (Dr. Bachman) conducted
a thorough review of Jackson's claim concluding Jackson had worked with severe
obstructive sleep apnea which, after being properly diagnosed, was successfully
treated with CPAP. Dr. Bachman noted that since Jackson began CPAP treatment,
Jackson had seen "considerable improvement" in his EF, now tested at 48%, his most
recent blood pressure reading was "in the normal range . . . 128/74," and Jackson had
"been exercising 40 minutes [per day] on the treadmill without difficulty o[r shortness
of breath], palpitations or chest pain." Dr. Bachman concluded, "[t]here is no
objective medical evidence of physical impairment or mental impairment that would
preclude [Jackson] from working in his [own occupation] or as an accountant." In a
letter dated May 12, 2004, based upon its review, Prudential reaffirmed its earlier
decision to deny benefits.

In response to the assertion that objective medical evidence was lacking,
Jackson sought testing by Dr. David Beare (Dr. Beare) to document Jackson's
cognitive impairment. In October 2004, Jackson underwent testing and Dr. Beare
authored his report. The testing was submitted to Prudential in December 2004 as a
part of Jackson's timely request for reconsideration. Prudential discounted this
evidence, asserting the testing occurred more than one year after the alleged onset date
of April 2003 and could not be "back-extrapolated" more than one year. Therefore,
in a letter dated February 8, 2005, Prudential reaffirmed its earlier conclusion that
Jackson was not disabled. Prudential "concluded that Mr. Jackson's physical
conditions would allow him to perform his own occupation on a full time basis," a
decision "consistent with [Prudential's] previous and current evaluations." Prudential
noted, "[t]his is the final level of appeal . . . . [and i]f you still disagree with the above
decision, you may file a lawsuit under [ERISA]."

On December 14, 2005, Jackson filed this action in the United States District
Court for the Western District of Arkansas alleging Prudential's decision to deny his
claim was unreasonable. The district court affirmed Prudential's claim denial, finding
the decision was supported by substantial evidence. This appeal followed.

II. DISCUSSION

The summary plan description grants Prudential, as "Claims Administrator,"
"the sole discretion to interpret the terms of the Group Contract, to make factual
findings, and to determine eligibility for benefits," and notes "[t]he decision of the
Claims Administrator shall not be overturned unless arbitrary and capricious." "[W]e
review the plan administrator's decision [to deny ERISA benefits] for an abuse of
discretion" when "the benefit plan grants the plan administrator discretionary
authority to determine eligibility for benefits or to construe the terms of the plan."
Groves v. Metro. Life Ins. Co., 438 F.3d 872, 874 (8th Cir. 2006) (citation and
internal quotation marks omitted). Thus, the proper standard of review here is for
abuse of discretion6 because the summary plan description grants Prudential
discretionary authority both to determine benefit eligibility and to construe the terms
of the group contract.

Under this standard of review, "[w]e reverse the plan administrator's decision
only if it is arbitrary and capricious." Id. (internal quotation marks omitted). "When
a plan administrator offers a reasonable explanation for its decision, supported by
substantial evidence, it should not be disturbed." Ratliff v. Jefferson Pilot Fin. Ins.
Co., 489 F.3d 343, 348 (8th Cir. 2007) (internal quotation marks omitted). Our court
has stated, "[t]he discretionary decision of a plan administrator is not unreasonable
merely because a different, reasonable interpretation could have been made." Id.
(internal citation and quotation marks omitted).

The Mayo Clinic physicians diagnosed sleep apnea as Jackson's primary
ailment and opined that effective treatment of his sleep apnea would result in
improvements in Jackson's energy levels and EF. The Mayo Clinic physicians'
diagnosis was correct because Jackson's tachycardia, EF, sleep and daytime energy
all improved as a result of the CPAP treatment. In addition, Jackson's blood pressure
was normal and he was successfully exercising on a treadmill for forty minutes per
day without difficulty. Thus, it is reasonable to conclude Jackson was better able to
perform the substantial and material duties of his occupation on his termination date
than before CPAP treatment was initiated and before the alleged onset date of his
disability. When Prudential's "decision is supported by . . . such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion . . . . [a] court
may not substitute its own judgment for [Prudential's]." Rittenhouse v. UnitedHealth
Group Long Term Disability Ins. Plan, 476 F.3d 626, 632 (8th Cir. 2007) (citation and
internal quotation marks omitted).

"It is not unreasonable for a plan administrator to deny benefits based upon a
lack of objective evidence." Groves, 438 F.3d at 875 (alteration and internal quotation
marks omitted). Prudential did just that, finding objective evidence of Jackson's
cognitive impairment was lacking. The Mayo Clinic records do not mention any
cognitive problems and described "no apparent learning barriers." Any mental or
cognitive deficiencies reasonably were associated with sleep apnea and Jackson's
resulting fatigue. Jackson later provided Dr. Beare's report in an attempt to provide
objective evidence of cognitive impairment; however, Prudential decided not to
consider this new evidence, because the evaluation was more than a year after the
claimed onset date. Prudential's decision was not arbitrary and capricious. While
consideration of Dr. Beare's report could lead another plan administrator to reach a
different reasonable conclusion, Dr. Beare's report does not render Prudential's
decision unreasonable where Prudential's decision is supported by substantial
evidence.

Jackson complains Prudential arbitrarily limited its review of Jackson's job to
a sedentary position. Dr. Frederick, FFO and Jackson (initially) all referred to
Jackson's CFO duties as sedentary. Jackson's job description reflects sedentary
duties. Jackson does not specify any particular job duty he could not perform except
generally to argue the job stress and his cognitive impairment prevented him from
performing his duties. Prudential possessed the job description, and contrary to
Jackson's allegations, Prudential considered all Jackson's duties as CFO for FFO in
formulating Prudential's coverage conclusion. That conclusion was not arbitrary and
was not an abuse of Prudential's discretion as Claims Administrator.